Formulas to Calculate Source Deductions and Contributions

Formulas to Calculate Source Formulas to Calculate Source Formulas to Calculate Source Formulas to Calculate Source Formulas to Calculate Source Formulas to Calculate Source Formulas to Calculate Source Formulas to Calculate Source Deductions and ContributionsDeductions and ContributionsDeductions and ContributionsDeductions and ContributionsDeductions and ContributionsDeductions and ContributionsDeductions and Contributions

2012This guide is availableThis guide is availableon our website.

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The information contained in this guide does not constitute a legal interpretation of the laws or regulations of Québec or Canada. Nor does this guide contain legislative amendments for the 2012 taxation year that were announced after October 28, 2011. However, you should verify that the texts of the guide reflect the latest fiscal legislation. To find out the changes with respect to source deductions and contributions, including changes announced after the publication of this document, go to www.revenuquebec.ca.

Our website also contains online services and documents for employers. You can consult documents, print them or download the dynamic versions of certain documents, as needed. Most of these documents can also be ordered online or by telephone. You will find contact information at the end of the guide.

Documents that are marked “SpeCiMen” are provided for information purposes only and are not to be used for any other purpose.

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IN-555-V (2011-09)

Employers who file more than 50 RL slips (information returns)

of the same type are required to file the RL-slip data online.

For information about the electronic filing methods available,

go to www.revenuquebec.ca.

If you wish to have software certified for filing RL slips

online, email the Direction de la gestion des relations avec

les partenaires et des communications personnalisées at

[email protected].

Online Filing of RL slips

In addition to filing RL-1 slip data and the Summary of Source Deductions and Employer Contributions (form RLZ-1.S-V) online, you can• view your file and your messages from Revenu Québec;• file your consumption tax returns and your source deductions

and employer contributions returns• remit your consumption taxes, source deductions and employer

contributions;• view your returns filed online; and• manage your powers of attorney.

To register for Revenu Québec’s online services, go to www.revenuquebec.ca.

Use Revenu Québec’s online services

It’s the fastest and easiest way to communicate with us, and it’s environmentally friendly.

COM-129.E-V (2011-09)

Contents

1 Introduction .........................................................................................................................................................6

1.1 Contents ......................................................................................................................................................6

1.2 Abbreviations used in the guide ....................................................................................................................6

1.3 information on certain terms used in the guide ..............................................................................................6

1.4 List of mathematical symbols used in this guide ............................................................................................9

2 Principal changes ..............................................................................................................................................10

2.1 Variable e – Value of personal tax credits ....................................................................................................10

2.2 Variables H, H1 and H2 – Deduction for employment income ........................................................................10

2.3 Variable K – The constant for adjusting the income tax rate .........................................................................10

2.4 Variable M – Qpp .......................................................................................................................................11

2.5 Variables n and n1 – Qpip ..........................................................................................................................11

3 Formulas to calculate Québec income tax withholdings .............................................................................12

3.1 Calculating income tax withholdings for regular payments ...........................................................................123.1.1 Regular payments ........................................................................................................................123.1.2 Bonuses, retroactive pay or similar lump-sum payments ................................................................18

3.2 Calculating income tax withholdings on a cumulative-averaging basis .........................................................253.2.1 Method 1 ....................................................................................................................................263.2.2 Method 2 ....................................................................................................................................29

4 Formula to calculate QPP contributions ........................................................................................................34

4.1 employee contribution ................................................................................................................................34

4.2 employer contribution .................................................................................................................................34

5 Formulas to calculate QPIP premiums ...........................................................................................................35

5.1 employee premium .....................................................................................................................................35

5.2 employer premium (with respect to an employee) ........................................................................................35

6 Formula to calculate the employer contribution to the health services fund ..........................................37

6

1 Introduction

1.1 Contents1.1 ContentsThis guide contains the formulas for calculating Québec income tax withholdings, Qpp contributions, Qpip premiums and the employer contribution to the health services fund.

The formulas also help you calculate source deductions for certain payments, such as bonuses, retroactive pay, payments covering accumulated overtime or unused vacation time, and commissions.

NoteYou cannot use the formulas to calculate a source deduction of income tax if the source deduction is calculated using a fixed rate that must be applied to the gross remuneration. For example, you cannot use the formulas to calculate the source deduction of income tax for a single payment or an income supplement payment.

The formulas to calculate Québec income tax withholdings are presented in three steps:• calculatingtheannualtaxableincome;• calculatingtheincometaxfortheyear;and• calculatingtheincometaxtobewithheldforthepayperiod.

in addition, each formula is followed by a list of all the relevant variables. note that the formulas, the variables and their definitions generally do not change from year to year.

note that this guide is to be used as a supplement to the Guide for employers (Tp-1015.G-V). For all information on source deductions and on employer and payer obligations, see the guide on our website at www.revenuquebec.ca.

1.2 Abbreviations used in the guide1.2 Abbreviations used in the guideCip Cooperative investment planCSST Commission de la santé et de la sécurité du travailFTQ Fédération des travailleurs et travailleuses du QuébeciFC international financial centreQpip Québec parental insurance planQpp Québec pension planRpp Registered pension planRRSp Registered retirement savings plan

1.3 Information on certain terms used in the guide1.3 Information on certain terms used in the guideBelow you will find information on a number of terms that we use frequently in this guide. These definitions are specific to this guide.

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Employee

The term “employee” is used to designate an individual who holds employment or an office.

Employment

The term “employment” is used to designate work carried out by an individual under a written or verbal contract of employment.

Employment income

For the purposes of this guide, employment income includes income from an office.

Individual

An individual is a natural person. For the purposes of this guide, “individual” refers both to an employee and to a beneficiary of an amount you pay as a payer.

Office

The term “office” designates a position for which an individual is entitled to be remunerated. For example, a member of the board of directors of a corporation holds an office, even if he or she performs no administrative duties. An individual who is an elected or appointed representative also holds an office.

Person

The term “person” is used to designate both a natural person and a legal person.

Place of residence

For the purposes of this guide, the term “place of residence” means the place of residence within the meaning of the Taxation Act.

See interpretation bulletin iMp. 22-3/R1 to determine the place of residence of an individual who leaves Québec and Canada.

Remuneration

Remuneration includes salary or wages and any other amount that you pay as an employer (for example, a retiring allowance) or as a payer (for example, pension benefits).

Remuneration, salary or wages paid

When we refer to “remuneration paid” or “salary or wages paid,” this covers remuneration, salary or wages that are paid, allocated, granted or awarded.

For example, if, in a given week, you pay an employee his or her regular salary of $400 and also grant the employee a taxable benefit in kind (that is, other than in cash) worth $200, the salary paid is $600. in other words, the benefit granted is considered salary or wages paid.

Similary, if you allocate tips to an employee, these tips constitute salary or wages that you pay to the employee.

NoteWith regard to the Qpip, only remuneration actually paid to an employee is considered salary or wages paid, because benefits in kind generally do not constitute eligible salary or wages under the Qpip.

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Salary or wages

The term “salary or wages” refers to gross employment income and therefore includes the following amounts and any similar payment made to an employee:• taxablebenefits(includingtaxableallowances);• commissions;• overtimepay;• vacationpay;• retroactivepay,includingpaymentsresultingfromacollectiveagreementsignedbeforethedeathofanemployee;• tips(includingallocatedtips);• advances;• bonuses;• certainamountspaidfurthertoanindustrialaccident–CSST;• indemnitiespaidfurthertoaprecautionarycessationofwork(thatis,theamountpaidtoanemployeeundertheAct

respecting occupational health and safety for the first five days following the date on which the employee ceased to work);

• theportionofthesalaryorwages(earnedduringtheyear)thatistobepaidinanotheryear,underasalarydeferralarrangement;

• amountspaidtoanemployeeduringaself-fundedleaveofabsence;• out-of-Canadalivingallowances;• locationincentivespaidtoaphysician;• directors’fees;• amountspaidafteranemployee’sdeath(otherthanadeathbenefit),providedthepaymentswereforeseeableatthe

timeofdeath;• feespaidinconnectionwithemployment(forexample,feespaidtocouncilorcommitteemembers);• earningslossbenefits,supplementaryretirementbenefitsandpermanentimpairmentallowancespaidundertheCanadian

Forces Members and Veterans Re-establishment and Compensation Act (federal statute).

note that, contrary to the definition provided in tax legislation, for the purposes of this guide the term “salary or wages” does not include the following:• wagelossreplacementbenefitspaidunderawagelossreplacementplantowhichtheemployercontributed;• amountspaidbyatrusteeunderanemployeetrustoraprofit-sharingplan;• amountspaidbyacustodianunderanemployeebenefitplan.

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1.4 List of mathematical symbols used in this guide1.4 List of mathematical symbols used in this guide

Symbol Definition

– minus

+ plus

/ divided by

x multiplied by

= equals

≥ greater than or equal to

≤ less than or equal to

% per cent

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2 Principal changes

This chapter outlines the principal changes made to the formulas for 2012, as well as some changes that came into effect in 2011 further to tax measures announced by the Ministère des Finances after publication of the 2011 version of this guide.

2.1 Variable E – Value of personal tax credits2.1 Variable E – Value of personal tax creditsThe indexation factor used to calculate the value of personal tax credits for 2012 is 2.66%.

in addition, to take into account the new tax credit for workers 65 or older that may be claimed in 2012 using form Tp-1015.3-V, we have modified the definition of variable e to distinguish indexed amounts (variable e1) from non-indexed amounts (variable e2). Variable e is thus defined as follows:

e = Value of personal tax credits indicated on form Tp-1015.3-V

= e1 + e2

if the result obtained is not a multiple of 5, round it off to the nearest multiple of 5. if the result is halfway between two multiples of 5, round it off to the higher multiple.

where

e1 = indexed value of personal tax credits, which corresponds to one of the following amounts:• theindexedvalueofvariableEfor2011multipliedby1.0266;• theamountfromline7offormTP-1015.3-V,forindividualswhocompletedthe2012-01versionofthe

form;• $10,925(thebasicamountfor2012),foremployeeswhobeganemploymentin2012andwhodidnot

complete form Tp-1015.3-V, or for new beneficiaries who did not complete the form.

NoteThe indexed value of variable e for 2011 corresponds to the value of variable e for 2010, multiplied by the indexation factor for 2011.

e2 = non-indexed value of the personal tax credits, which corresponds to the amount from line 9 of form Tp-1015.3-V, for individuals who completed the 2012-01 version of the form.

2.2 Variables H, H2.2 Variables H, H11 and H and H22 – Deduction for employment income – Deduction for employment incomeThe maximum deduction for employment income has been increased from $1,045 to $1,075 for 2012. Consequently, the maximum amount of variables H, H1 and H2 has been increased from $1,045 to $1,075.

2.3 Variable K – The constant for adjusting the income tax rate2.3 Variable K – The constant for adjusting the income tax rateFor 2012, the income tax rates applicable to the three income tax brackets remain at 16%, 20% and 24% and the thresholds for the three income tax brackets have been indexed:• The16%rateappliestotaxableincomeof$40,100orless.(Thethresholdwaspreviously$39,060)• The20%rateappliestotaxableincomeofmorethan$40,100butnotmorethan$80,200.(Thethresholdwaspreviously

$78,120.) • The24%rateappliestotaxableincomeofmorethan$80,200.

The values of variable K have therefore been increased from $1,562 to $1,604 and from $4,687 to $4,812.

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2.4 Variable M – QPP2.4 Variable M – QPPThe Qpp contribution rate has been increased from 9.9% to 10.05%, for 2012 which corresponds to a contribution rate of 5.025% for the employee and 5.025% for the employer. in addition, the maximum pensionable earnings for the purposes of the Qpp have been increased from $48,300 to $50,100. Variable M has therefore been increased from $2,217.60 to $2,341.65.

2.5 Variables N and N2.5 Variables N and N11 – QPIP – QPIPThe maximum insurable earnings subject to Qpip premiums have been increased from $64,000 to $66,000 for 2012. Also, the employee premium rate has been increased from 0.537% to 0.559%, and the employer premium rate has been increased from 0.752% to 0.782%. As a result, variable n is $368.94 (instead of $343.68) and variable n1 is $516.12 (instead of $481.28).

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3 Formulas to calculate Québec income tax withholdings

To calculate the income tax to be withheld from the remuneration paid at regular intervals to an individual (employee or beneficiary), use the formulas described in section 3.1.1.

if an employee receives, in addition to a salary or wages, a bonus, retroactive pay or similar lump-sum payment (for example, a payment covering accumulated overtime or unused vacation time), use one of the methods described in section 3.1.2.

Iftheemployee’sremunerationvariesinamountfromonepayperiodtoanother(forexample,anemployee who earns commissions), use instead one of the methods described in section 3.2.

Noteif you calculate an income tax withholding using the formula applicable to regular payments and compare the result with the amount shown in the Source Deduction Table for Québec income Tax (Tp-1015.Ti-V), you may find that the amounts are not identical. The difference is attributable to the fact that different elements are taken into account in the calculation.

Do not withhold income tax if the employee completed the 2012-01 version of the Source Deductions Return (form Tp-1015.3-V) and entered “X” on line 20 of the form.

3.1 Calculating income tax withholdings for regular payments3.1 Calculating income tax withholdings for regular payments

3.1.1 Regular payments

Step 1 Calculating the annual taxable income

i = Annual taxable income

= p x (G – F – H) – J – J1

where

p = number of pay periods in the year

G = Gross remuneration subject to source deductions of income tax for the pay period. Do not include bonuses, retroactive pay or similar lump-sum payments.

F = Total of the following amounts for the pay period:• amountswithheldascontributionstoanRPP;• amountswithheldascontributionstoanRRSP;• amountswithheldascontributionspaidunderaretirementcompensationarrangement;• thedeductionrespectingtheCIP,thatis,125%oftheamountwithheldfromtheemployee’sremuneration

forthepurchaseofpreferredsharesqualifyingundertheCIP;• thetraveldeductionforresidentsofdesignatedremoteareas;• thesecurityoptiondeduction;• theportionoftheremunerationthatgivesentitlementtooneofthefollowingdeductions:

– the deduction for employment income situated on a reserve or premises,– the deduction for employment income earned on a vessel,

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13

– the deduction for iFC employees,– the deduction for foreign specialists,– the deduction for foreign researchers,– the deduction for foreign researchers on a post-doctoral internship,– the deduction for foreign experts,– the deduction for foreign professors,– the deduction for foreign producers or foreign individuals holding a key position in a foreign production

filmed in Québec,– the deduction for foreign farm workers,– the Canadian Forces personnel and police deduction.

H = Deduction for employment income

= (0.06 x D), maximum of $1,075 / p

where

D = Gross salary or wages subject to source deductions of income tax for the pay period. Do not include bonuses, retroactive pay or similar lump-sum payments.


J = Deductions indicated on line 19 of form Tp-1015.3-V. if the value of J is determined after the first pay period in the year, it is instead equal to the result of the following calculation:

= (p x J3) / pr

where


J3 = Deductions indicated on line 19 of form Tp-1015.3-V after the first pay period in the year

pr = number of pay periods remaining in the year

J1 = Annual deductions that we authorized after the individual completed form Tp-1016-V. if the value of J1 is determined after the first pay period in the year, it is instead equal to the result of the following calculation:

= (p x J2) / pr

where


J2 = Deductions that we authorized after the first pay period in the year




http://www.revenu.gouv.qc.ca/en/sepf/formulaires/tp/tp-1016.aspx

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Step 2 Calculating the income tax for the year

Y = income tax for the year

= (T x i) – K – K1 – (0.20 x e) – (0.15 x p x Q) – (0.25 x p x Q1)

▼if the result is negative, enter 0.

where

T = income tax rate applicable to the bracket of annual taxable income

Annual taxable income (I) Income tax rate (T) Constant (K)

Over But not over

$0 $40,100 16% $0

$40,100 $80,200 20% $1,604

$80,200 24% $4,812


K = Constant applicable for the adjustment of the income tax rate on the basis of the annual taxable income

K1 = non-refundable tax credits that we authorized for the year after the individual completed form Tp-1016-V (for example, the tax credit for charitable donations). if the value of K1 is determined after the first pay period in the year, it is instead equal to the result of the following calculation:

= (p x K2) / pr

where


K2 = non-refundable tax credits that we authorized after the first pay period in the year



15


= e1 + e2


where

e1 = indexed value of personal tax credits, which corresponds to one of the following amounts:• theindexedvalueofvariableEfor2011multipliedby1.0266;• theamountfromline7offormTP-1015.3-V,forindividualswhocompletedthe2012-01versionofthe

form;• $10,925(thebasicamountfor2012),foremployeeswhobeganemploymentin2012andwhodidnot

complete form Tp-1015.3-V, or for new beneficiaries who did not complete the form.



NoteThere may be a limit on the deductions and personal tax credits an individual can claim on form Tp-1015.3-V if the individual is not resident in Canada in 2012, or if he or she becomes resident in Canada during the year. For more information, consult section 13.13.4 of guide Tp-1015.G-V.


Q = Amount withheld for the pay period for the purchase of class A shares in the Fonds de solidarité des travailleurs du Québec (FTQ)

Q1 = Amount withheld for the pay period for the purchase of class A or class B shares in Fondaction, the Fonds dedéveloppementdelaConfédérationdessyndicatsnationauxpourlacoopérationetl’emploi

NoteThe total of the amounts withheld for the year after adding the value of variables Q and Q1 must not exceed $5,000. For the pay period in which the annual maximum is reached, the value of variables Q and Q1 must be zero.



16

Step 3 Calculating the income tax to be withheld for the pay period

A = income tax to be withheld for the pay period

= (Y / p) + L

▼if the result is negative,

enter 0.

where



L = Additional source deduction of income tax requested by the individual on form Tp-1017-V, source deduction of income tax requested by a fisher on form Tp-1015.n-V, or amount indicated on line 11 of form Tp-1015.3-V, for the pay period

Example: Calculating income tax withholdings for regular payments

pierre is an employee who earns a gross annual salary of $52,000 and is paid weekly ($1,000 per week). He contributes $70perweek,or$3,640fortheyear,toanRPP.Theamountindicatedonline10ofPierre’sTP-1015.3-Vformis$21,830.On January 3, pierre purchases $2,000 in shares of the Fonds de solidarité des travailleurs du Québec (FTQ) and $3,000 in shares of Fondaction, the Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l’emploi,payableoverthefirst20payperiodsintheyear.

For the first 20 pay periods in the year, the income tax withholdings are calculated as follows:

Step 1


= p x (G – F – H) – J – J1

= 52 x ($1,000.00 – $70.00 – $20.67) – $0.00 – $0.00

= 52 x ($909.33) – $0.00 – $0.00

= $47,285.16 – $0.00 – $0.00

= $47,285.16

Step 2



= (0.20 x $47,285.16) – $1,604 – $0.00 – (0.20 x $21,830.00) – (0.15 x 52 x $100.00) – (0.25 x 52 x $150.00)

= $9,457.03 – $1,604 – $0.00 – $4,366 – $780 – $1,950

= $7,853.03 – $4,366 – $780 – $1,950

= $757.03


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17

Step 3


= (Y / p) + L

= ($757.03 / 52) + $0.00

= $14.56

For the 32 pay periods remaining in the year, the income tax withholdings are calculated as follows:

Step 1


= p x (G – F – H) – J – J1

= 52 x ($1,000.00 – $70.00 – $20.67) – $0.00 – $0.00

= 52 x ($909.33) – $0.00 – $0.00

= $47,285.16 – $0.00 – $0.00

= $47,285.16

Step 2



= (0.20 x $47,285.16) – $1,604 – $0.00 – (0.20 x $21,830.00) – (0.15 x 52 x $0.00) – (0.25 x 52 x $0.00)

= $9,457.03 – $1,604 – $0.00 – $4,366 – $0.00 – $0.00

= $7,853.03 – $4,366

= $3,487.03

Step 3


= (Y / p) + L

= ($3,487.03 / 52) + $0.00

= $67.06

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3.1.2 Bonuses, retroactive pay or similar lump-sum payments

You may use either of the following methods to calculate the income tax to be withheld from bonuses, retroactive pay or similar lump-sum payments (for example, a payment covering accumulated overtime or unused vacation time). please note that Method 1 is more precise than Method 2.

NoteIfthetotaloftheemployee’sannualsalaryorwagesandtheamountofthelump-sumpaymentisnotmorethan$13,700,do not use these formulas. Simply withhold 8% income tax from the lump-sum payment.

Do not withhold income tax if the employee completed the 2012-01 version of form Tp-1015.3-V and entered “X” on line 20 of the form.

Method 1


i1 = Annual taxable income accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid

= (G1 – F1 – H1) + [pr x (G – F – H2)] – J – J1

where

G1 = Total of the amounts included in variable G below, accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid

F1 = Total of the amounts included in variable F below, accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid

H1 = Total of the amounts included in variable H in section 3.1.1, accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid





– the deduction for employment income situated on a reserve or premises,– the deduction for employment income earned on a vessel,– the deduction for iFC employees,– the deduction for foreign specialists,


19

– the deduction for foreign researchers,– the deduction for foreign researchers on a post-doctoral internship,– the deduction for foreign experts,– the deduction for foreign professors,– the deduction for foreign producers or foreign individuals holding a key position in a foreign production


H2 = Deduction for employment income

= (0.06 x D1), maximum of ($1,075 – H1) / p

where

D1 = B1 + B2 + G1 + D

where

B1 = Bonuses, retroactive pay or similar lump-sum payments paid since the beginning of the year (excluding variable B2) (see note below)

B2 = Bonuses, retroactive pay or similar lump-sum payments paid during the pay period (see note below)

G1 = Total of the amounts included in variable G, accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid


Noteif you took into account an amount included in variable F in calculating the income tax to be withheld from bonuses, retroactive pay or similar lump-sum payments paid since the beginning of the year (variable B1), including those paid during the pay period (variable B2), you must reduce variables B1 and B2 accordingly.

H1 = Total of the amounts included in variable H in section 3.1.1, accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid



= (p x J3) / pr

where






20


= (p x J2) / pr

where





Y1 = income tax for the year on the remuneration included in variable B1

= [T x (i1 + B1)] – K – K1 – (0.20 x e) – (0.15 x p x Q) – (0.25 x p x Q1)

Y2 = income tax for the year on the remuneration included in variables B1 and B2

= [T x (i1 + B1 + B2)] – K – K1 – (0.20 x e) – (0.15 x p x Q) – (0.25 x p x Q1)

Notein calculating variable Y1, you must determine the income tax rate (variable T) according to the result obtained when you add variables i1 and B1. For example, if variable i1 equals $50,000 and variable B1 equals $5,000, the income tax rate (variable T) is the rate applicable to taxable income of $55,000 ($50,000 + $5,000), that is, 20%.

in calculating variable Y2, you must determine the income tax rate (variable T) according to the result obtained when you add variables i1, B1 and B2.

where



Over But not over

$0 $40,100 16% $0

$40,100 $80,200 20% $1,604

$80,200 24% $4,812

i1 = Annual taxable income accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid



21




K1 = non-refundable tax credits that we authorized for the year after the individual completed form Tp-1016-V (for example, the tax credit for charitable donations). if the value of K1 is determined after the first pay period in the year, it is instead equal to the result of the following calculation:

= (p x K2) / pr

where


K2 = non-refundable tax credits that we authorized after the first pay period in the year



= e1 + e2


where

e1 = indexed value of personal tax credits, which corresponds to one of the following amounts:• theindexedvalueofvariableEfor2011multipliedby1.0266;• theamountfromline7offormTP-1015.3-V,forindividualswhocompletedthe2012-01version

oftheform;• $10,925(thebasicamountfor2012),foremployeeswhobeganemploymentin2012andwho

did not complete form Tp-1015.3-V, or for new beneficiaries who did not complete the form.







22


Q = Amount withheld for the pay period for the purchase of class A shares in the Fonds de solidarité des travailleurs du Québec (FTQ)

Q1 = Amount withheld for the pay period for the purchase of class A or class B shares in Fondaction, the Fonds dedéveloppementdelaConfédérationdessyndicatsnationauxpourlacoopérationetl’emploi



A1 = income tax to be withheld from a bonus, retroactive pay or similar lump-sum payment paid during the pay period

= Y2 – Y1

where

Y2 = income tax for the year on the remuneration included in variables B1 and B2


Method 2



= [p x (G – F – H)] + B1 + B2 – J – J1

where




forthepurchaseofpreferredsharesqualifyingundertheCIP;

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• thetraveldeductionforresidentsofdesignatedremoteareas;• thesecurityoptiondeduction;• theportionoftheremunerationthatgivesentitlementtooneofthefollowingdeductions:

– the deduction for employment income situated on a reserve or premises,– the deduction for employment income earned on a vessel,– the deduction for iFC employees,– the deduction for foreign specialists,– the deduction for foreign researchers,– the deduction for foreign researchers on a post-doctoral internship,– the deduction for foreign experts,– the deduction for foreign professors,– the deduction for foreign producers or foreign individuals holding a key position in a foreign production



= (0.06 x D), maximum of $1,075 / p

where







= (p x J3) / pr

where






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= (p x J2) / pr

where




Step 2 Calculating the Québec income tax to be withheld for the pay period

A = Québec income tax to be withheld from a bonus, retroactive pay or similar lump-sum payment paid during the pay period

= T x B2

where



Over But not over

$0 $40,100 16% $0

$40,100 $80,200 20% $1,604

$80,200 24% $4,812


Noteif you took into account an amount included in variable F in calculating the income tax to be withheld from bonuses, retroactive pay or similar lump-sum payments paid during the pay period (variable B2), you must reduce variable B2 accordingly.


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Example: Calculating income tax withholdings from retroactive pay (Method 2)

Tom, an employee whose gross salary is $800 per week, contributes $25 per week to an Rpp. His employer withholds $73.21 in income tax from the salary paid each pay period.

Duringonepayperiod,Tomreceivesretroactivepayof$4,000inadditiontohissalary.Duringthatpayperiod,Tom’sRPPcontribution is increased to $165, of which $140 relates to the retroactive pay.

Step 1


= [p x (G – F – H)] + B1 + B2 – J – J1

= [52 x ($800.00 – $25.00 – $20.67)] + $0.00 + ($4,000.00 – $140.00) – $0.00 – $0.00

= 52 x ($754.33) + $0.00 + $3,860.00 – $0.00 – $0.00

= $39,225.16 + $0.00 + $3,860.00 – $0.00 – $0.00

= $43,085.16

Step 2

A3 = income tax withholding from the retroactive pay paid during the pay period

= T x B2

= 0.20 x $3,860.00

= $772.00

The total income tax withholding for the pay period is $845.21, that is, the income tax withholding from his retroactive pay ($772.00) plus the income tax withholding from his salary ($73.21).

3.2 Calculating income tax withholdings on a cumulative-averaging basis3.2 Calculating income tax withholdings on a cumulative-averaging basisYou must use one of the following methods to calculate source deductions of income tax for employees whose remuneration varies (for example, employees who earn commissions).

either of the following methods may be used to calculate income tax on bonuses, retroactive pay or similar lump-sum pay-ments (for example, a payment covering accumulated overtime or unused vacation time). Under Method 1, the Québec income tax to be withheld from such an amount is spread out over the pay periods remaining in the year. Under Method 2, the total amount of Québec income tax applicable to such an amount is withheld for the pay period concerned.

NoteIfthetotaloftheemployee’sannualsalaryorwagesandthelump-sumpaymentisnotmorethan$13,700,donotusethese formulas. Simply withhold 8% income tax from the lump-sum payment. Do not withhold income tax if the employee completed the 2012-01 version of form Tp-1015.3-V and entered “X” on line 20 of the form.


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3.2.1 Method 1



= [S1 x (G – F – H)] + B – J – J1

▼if the result is negative, enter 0.

where

S1 = Annualization factor (the number of pay periods in the year, divided by the number corresponding to the current pay period)

Examples52 pp 26 pp 24 pp

First pay period S1 = 52 / 1 26 / 1 24 / 1

Second pay period S1 = 52 / 2 26 / 2 24 / 2

Last pay period S1 = 52 / 52 26 / 26 24 / 24

G = Gross remuneration subject to source deductions of income tax for the pay period, plus the total gross remuneration since the beginning of the year (excluding variable B)

F = Total of the following amounts taken into account since the beginning of the year (including the pay period):• amountswithheldascontributionstoanRPP;• amountswithheldascontributionstoanRRSP;• amountswithheldascontributionspaidunderaretirementcompensationarrangement;• thedeductionrespectingtheCIP,thatis,125%oftheamountwithheldfromtheemployee’sremuneration




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= (0.06 x D), maximum of $1,075 / S1

where

D = Gross salary or wages subject to source deductions of income tax for the pay period, plus the total gross salary or wages since the beginning of the year (including variable B)


B = Bonuses, retroactive pay or similar lump-sum payments paid during the pay period, plus those paid since the beginning of the year

J = Deductions indicated on line 19 of form Tp-1015.3-V

J1 = Annual deductions that we authorized after the individual completed form Tp-1016-V



= (T x i) – K – K1 – (0.20 x e) – (0.15 x S1 x Q) – (0.25 x S1 x Q1)

where



Over But not over

$0 $40,100 16% $0

$40,100 $80,200 20% $1,604

$80,200 24% $4,812



K1 = non-refundable tax credits that we authorized for the year after the individual completed form Tp-1016-V (for example, the tax credit for charitable donations)




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= e1 + e2


where








Q = Amount withheld for the pay period for the purchase of class A shares in the Fonds de solidarité des travailleurs du Québec (FTQ) plus the amount withheld for this purpose since the beginning of the year

Q1 = Amount withheld for the pay period for the purchase of class A or class B shares in Fondaction, the Fonds dedéveloppementdelaConfédérationdessyndicatsnationauxpourlacoopérationetl’emploi,plus the amount withheld for this purpose since the beginning of the year




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= [(Y / S1) – M] + L

▼if the result is

negative, enter 0.

where



M = Cumulative income tax withheld to the last pay period (excluding variable L)


3.2.2 Method 2

if you use Method 2, you must first determine the Québec income tax to be withheld from a bonus, retroactive pay or similar lump-sum payment that you paid during the pay period (variable A3), and then determine the Québec income tax to be withheld from the other remuneration paid during the pay period (variable A). You proceed this way because the amount determined for variable A3 will affect the amount determined for variable A.


i3 = Annual taxable income, plus the remuneration included in variable B3

= [S1 x (G – F – H1)] + B3 – J – J1


= [S1 x (G – F – H2)] + B4 – J – J1

where


Examples52 pp 26 pp 24 pp

First pay period S1 = 52 / 1 26 / 1 24 / 1

Second pay period S1 = 52 / 2 26 / 2 24 / 2

Last pay period S1 = 52 / 52 26 / 26 24 / 24




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G = Gross remuneration subject to source deductions of income tax for the pay period, plus the total gross remuneration since the beginning of the year (excluding variable B)

F = Total of the following amounts taken into account since the beginning of the year (including the pay period):• amountswithheldascontributionstoanRPP;• amountswithheldascontributionstoanRRSP;• amountswithheldascontributionspaidunderaretirementcompensationarrangement;• thedeductionrespectingtheCIP,thatis,125%oftheamountwithheldfromtheemployee’sremuneration




H1 = Deduction for employment income from the gross salary or wages and the remuneration included in variable B3

= [0.06 x (D1 + B3)], maximum of $1,075 / S1

where

D1 = Gross salary or wages accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid, excluding variable B3

B3 = Variable B4 below plus the bonuses, retroactive pay or similar lump-sum payments paid during the pay period


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H2 = Deduction for employment income from the gross salary or wages and the remuneration included in variable B4

= [0.06 x (D1 + B4)], maximum of $1,075 / S1

where

D1 = Gross salary or wages, accrued to the date the bonus, retroactive pay or similar lump-sum payment was paid, excluding variable B4

B4 = Bonuses, retroactive pay or similar lump-sum payments paid since the beginning of the year (other than those paid during the pay period)


J = Deductions indicated on line 19 of form Tp-1015.3-V

J1 = Annual deductions that we authorized after the individual completed form Tp-1016-V



= (T x i3) – K – K1 – (0.20 x e) – (0.15 x S1 x Q) – (0.25 x S1 x Q1)


= (T x i4) – K – K1 – (0.20 x e) – (0.15 x S1 x Q) – (0.25 x S1 x Q1)

where



Over But not over

$0 $40,100 16% $0

$40,100 $80,200 20% $1,604

$80,200 24% $4,812




K1 = non-refundable tax credits that we authorized for the year after the individual completed form Tp-1016-V (for example, the tax credit for charitable donations).




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= e1 + e2


where








Q = Amount withheld for the pay period for the purchase of class A shares in the Fonds de solidarité des travailleurs du Québec (FTQ), plus the amount withheld for this purpose since the beginning of the year

Q1 = Amount withheld for the pay period for the purchase of class A or class B shares in Fondaction, the Fonds dedéveloppementdelaConfédérationdessyndicatsnationauxpourlacoopérationetl’emploi,plus the amount withheld for this purpose since the beginning of the year




33


A4 = income tax to be withheld for the pay period

= A + A3

where

A = income tax to be withheld from the remuneration for the pay period. Do not include bonuses, retroactive pay or similar lump-sum payments paid during the pay period.

= [(Y – M1) / S1 ] – M + L

▼if the result is negative,

enter 0.

where


M1 = Cumulative income tax withheld from bonuses, retroactive pay or similar lump-sum payments paid since the beginning of the year, including variable A3


M = Cumulative income tax withheld to the last pay period (excluding variables L and M1)


A3 = income tax to be withheld from a bonus, retroactive pay or similar lump-sum payment paid during the pay period

= Y3 – Y4

where






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4 Formula to calculate QPP contributions

4.1 Employee contribution4.1 Employee contributionThe following formula is used to calculate the employee contribution to the Qpp only for an employee whose employment is continuous and whose pay periods are regular.

Foreachpayperiod,youmustwithholdtheemployee’scontributiontotheQPPfromhisorhercontributoryearningsuntilthe totalof theamountswithheld reaches theemployee’smaximumannualcontribution.Contributoryearnings in theformula correspond to S3 – (V / p).

Calculating the employee contribution

C = Employee’sQPPcontributiontobewithheldforthepayperiod

= 0.05025 x [S3 – (V / p)], to a maximum of M – A5

Noteif variable C is an amount containing a fraction of a cent, do not take into account a fraction of less than $0.005 (one-half cent). A fraction of $0.005 or more is considered $0.01 (one cent).

if variable C is greater than 0 but less than $0.01, you must withhold $0.01 as a contribution even if the fraction is less than $0.005 (one-half cent). For example, if variable C is equal to $0.001 (one-tenth cent), you must withhold $0.01.

if the result obtained in calculating the pay period exemption (V / p) contains three or more decimal places, keep only the first two decimal places and do not round off.

example: V / p = $3,500 / 52 = $67.3077 = $67.30

where

S3 = Employee’sgrosspensionablesalaryorwagesundertheQPPforthepayperiod

V = Basic exemption for the year under the Qpp ($3,500)


M = Employee’smaximumannualQPPcontribution($2,341.65)

A5 = Employee’sQPPcontributionswithheldsincethebeginningoftheyear

NoteWhen a bonus, overtime pay or retroactive pay is paid separatelyfromtheemployee’sbasicsalaryorwages,and the pay period exemption (V / p) has already been taken into account, the withholding is 5.025% of the amount paid, to a maximum of M – A5.

4.2 Employer contribution4.2 Employer contributionThere is no formula to calculate the employer contribution. You simply pay a contribution that is equal to the total amount of the contributions you withheldfromtheemployees’pensionablesalaryorwages(ascalculatedusingtheformulainsection 4.1).

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5 Formulas to calculate QPIP premiums

5.1 Employee premium5.1 Employee premiumUse the formula below to calculate the employee Qpip premium.

Foreachpayperiod,youmustwithholdanemployee’sQPIPpremiumfromhisorhergrosseligiblesalaryorwagesundertheQPIPuntilthetotalamountreachestheemployee’smaximumannualpremium.

Calculating the employee Premium

Ap = Employee’sQPIPpremiumtobewithheldforthepayperiod

= (0.00559 x S4), to a maximum of n – A6

Noteif variable Ap is an amount containing a fraction of a cent, do not take into account a fraction of less than $0.005 (one-half cent). A fraction of $0.005 or more is considered $0.01 (one cent).

if variable Ap is greater than 0 but less than $0.01, you must withhold $0.01 as a premium even if the fraction is less than $0.005 (one-half cent). For example, if variable Ap is equal to $0.001 (one-tenth cent), you must withhold $0.01.

where

S4 = Employee’sgrosseligiblesalaryorwagesundertheQPIPforthepayperiod

N = Employee’smaximumannualQPIPpremium($368.94)

A6 = Employee’sQPIPpremiumswithheldsincethebeginningoftheyear

5.2 Employer premium (with respect to an employee)5.2 Employer premium (with respect to an employee)Use the formula below to calculate the employer Qpip premium.

Foreachpayperiod,youmustcalculatetheemployer’sQPIPpremiumforeachemployeeonthebasisoftheemployee’sgrosseligiblesalaryorwagesundertheQPIPuntilthetotalamountreachestheemployer’smaximumannualpremiumforthat employee. Once the employee’s maximum annual premium is reached, the employer’s maximum annual premium is also reached.

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Calculating the employer premium (with respect to an employee)

Ap1= Employer’sQPIPpremiumforthepayperiodwithrespecttotheemployee

= (0.00782 x S4), to a maximum of n1 – A7

Noteif variable Ap1 is an amount containing a fraction of a cent, do not take into account a fraction of less than $0.005 (one-half cent). A fraction of $0.005 or more is considered $0.01 (one cent).

where

S4 = Employee’sgrosseligiblesalaryorwagesundertheQPIPforthepayperiod

n1 = Employer’smaximumannualQPIPpremiumwithrespecttoeachemployee($516.12)

A7 = Employer’sQPIPpremiumscalculatedforpreviouspayperiodswithrespecttotheemployee

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6 Formula to calculate the employer contribution to the health services fund

Use the formula below to calculate the employer contribution to the health services fund.

Calculating the employer contribution to the health services fund

D2 = Employer’scontributiontothehealthservicesfundforthepayperiod

= W x S2

where

W = Contribution rate (%) based on total payroll

= 2.31 + (0.39 x S)

where

S = 1, if the total payroll is ≤ $1,000,000

S = 5, if the total payroll is ≥ $5,000,000

S = total payroll , if the total payroll is between $1,000,000 and $5,000,000

$1,000,000

NoteThe contribution rate must be rounded off to the second decimal place. When the number in the third decimal place is 5 or more, round off the number in the second decimal place to the next highest number.

S2 = Total salaries or wages paid for the pay period respecting which you are required to pay a contribution to the health services fund

If you are a new employer, your total payroll for the first two consecutive calendar years corresponds to the salaries or wages paid from the beginning of the calendar year to the end of the period covered by the remittance of the contribution to the health services fund. The rate must therefore be adjusted for each remittance period, on the basis of the cumulative total payroll for the preceding periods.

If you are not a new employer, your total payroll is generally equal to your total payroll for the preceding year.

For more information, see section 8.4.2 of guide Tp-1015.G-V.


TP-1015.F-V (2012-01)

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Businesses, employers and agents for consumption taxes

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2011

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